The State of California just enacted a bill confirming that most workers are employees rather than independent contractors and affirming the relevant legal analysis implemented by California Courts. Although the law is applicable to all employers in the State of California, it has a particularly strong effect on Lyft, Uber and numerous “gig” companies that will require them to acknowledge many of their workers as employees, rather than independent contractors. Our employment attorneys in Orange County believe similar laws may pass in other states as well, as California is often the leader with regard to employment regulation.
In California, the law confirms what California Courts have found that, in general, a person would only be considered an independent contractor if the tasks he or she performs fall outside the parameters of the company’s usual course of business. In addition, workers are not regarded as independent contractors if the business exerts meaningful control over how their job duties are performed or if the work they do is part of the company’s regular business.
Lorena Gonzalez, the Democrat Assemblywoman who authored the bill, stated that it was developed as a way to prohibit businesses from miscategorizing workers and ultimately gaming the system. Naturally, it would have been difficult to predict the ways in which the employment landscape would change when these companies were created, but the aim of California lawmakers is to prevent businesses from passing costs onto workers and taxpayers.
Uber Attorney Announces That Drivers are to Maintain Contractor Status
Uber’s top attorney announced on September 11, 2019, that in spite of the new regulations, the company has no plans to treat drivers as employees. Uber’s Chief Legal Officer, Tony West, promised that drivers will maintain independent contractor status.
West stated that Uber’s business does not merely provide rides, but serves as a technology platform for numerous kinds of digital marketplaces, and that they are somewhat used to legal battles.
As our Orange County employment attorneys know from handling these cases, as well as observing the local legal environment, litigation is almost certain to continue if companies continue to attempt to find justifications to classify regular works as independent contractors.
When the costs and complexities of having employees versus hiring independent contractors are considered, it is not difficult to see why some businesses do everything they can to maintain contractors.
One case in point is a long-running dispute that was settled for $228 million in 2015, between FedEx and their Ground California drivers. FedEx Ground robustly defended its purported independent contractor model, but the Ninth Circuit determined that over 2,250 drivers were actually covered by California’s employee protection statutes. Our employment attorneys in Orange County will continue to follow the story and watch for any new developments.